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Ford seen boon for aluminum demand

Keywords: Tags  aluminum, Ford, F-150, material substitution, Alcoa, Richard Schultz, Ducker Worldwide, Lloyd O'Carroll O'Carroll Aluminum Bulletin

CHICAGO — The new aluminum-intensive body enclosure of the Ford F-150 pickup truck could use about 1,000 pounds of the light metal per vehicle, boosting total demand by at least 500 million pounds annually, according to industry analysts.

Much of that initial demand could be for primary metal, some analysts said, similar to the can market’s shift from steel to aluminum decades ago. The can sheet sector initially relied on primary metal for feedstock until enough scrap was generated to form a recycling network based on used beverage cans (UBCs), they said.

"Can sheet became a real product in the late 1960s, so it was the late ’70s, early ’80s before it became more than 50 percent scrap," said Lloyd O’Carroll, principal of O’Carroll Aluminum Bulletin. He predicted that it will be at least 10 years before scrap becomes a significant contender to primary metal as feedstock for auto body sheet, and that—unlike cans—auto might never shift to more than 50-percent recycled content, given the sector’s demanding specifications.

O’Carroll estimated that the 2015 F-150 will use about 1,000 pounds of aluminum per vehicle and that 700,000 to 750,000 vehicles could be produced annually, creating new demand for as much as 750 million pounds per year, including aluminum that becomes scrap in the stamping process. "In steel, scrap rates are between 35 and 45 percent of the parts, and there is no reason to think scrap rates on aluminum are going to be much different," he said.

Dearborn, Mich.-based Ford Motor Co. said that almost all of the body structure, closures and cargo box of the F-150 will be made with aluminum but did not provide a specific amount of aluminum per vehicle. The automaker also declined to provide a production forecast for the vehicle.

Richard Schultz, managing director of the materials practice at Troy, Mich.-based market research firm Ducker Worldwide LLC, said the 1,000 pounds of aluminum expected to be used on each F-150 would include about 600 pounds for the vehicle’s aluminum body enclosure vs. about 350 pounds of total aluminum on the 2014 F-150.

Those 600 pounds will require roughly 1,000 pounds of aluminum input per vehicle for sheet and extrusions in the body enclosure alone, or roughly 500 million pounds of new incremental demand assuming 500,000 vehicles are produced per year, Schultz said. "It’s not earth-shaking in the grand scheme of things. But for the guys making the sheet and the extrusions, it’s a big deal," he said.

Producers will reach a "steady state" where they get back 30 to 40 percent of what they ship to automakers and suppliers as scrap, but the process of recovering new vehicles as scrap could take time, Schultz said. "Other than the ones that get crashed, people drive these trucks forever," he said, estimating it could take roughly 15 years for new F-150s to re-enter the scrap stream.

The difficulty in sourcing material for body enclosures on the F-150 is due in part to more-demanding alloys—such as 6111 and 5754—used in its body, Schultz said. "It’s nothing exotic. But they’re not run-of-the-mill 6061 or 5182. You can’t walk into a service center and buy sheet that you can use to make the F-150."

But while it will be years before aluminum-body F-150s enter the scrap stream in significant numbers, they will have an impact on the market in 2014—especially as production of the vehicles begins toward the middle of the year, according to Timothy Hayes, principal of Lawrence Capital, Richmond, Va.

About 5.1 billion pounds of aluminum are expected to be shipped to the automotive industry in the United States and Canada in 2015, up 10.9 percent from the 4.6 billion pounds Hayes estimates was shipped to the sector in 2014. The double-digit growth comes even as auto production is expected to increase only 3 percent to 16.6 million vehicles in 2014, he said.

That 10.9-percent forecast gain in shipments can be divided almost equally among three factors: more cars and trucks being produced, the ongoing shift from steel to aluminum, and the switchover of the F-150 body to aluminum, Hayes said. "So 3 to 4 percent of that increase is driven mainly by the change on the F-150. That’s why it’s truly a big deal."

And the F-150 is likely only the first of several programs expected to significantly boost aluminum content in coming years, according to Pittsburgh-based aluminum producer Alcoa Inc., one of the metal suppliers to the F-150. "It is just the beginning," a company spokesman said. "We have active programs in place with just about every (original equipment manufacturer) there is."

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